Page 172 - GSTL_26th March 2020_Vol 34_Part 4

682 GST LAW TIMES [ Vol. 34
S.T.R. 684 (Uttarakhand) has held that under the rent-a-cab scheme, the hirer is
endowed with the freedom to take the vehicle, wherever he wishes, and he is
only obliged to keep the holder of the licence informed of his movements from
time to time. When a person chooses to hire a car, which is offered on the
strength of a permit issued by the Motor Vehicles Department, then the owner of
the vehicle, who may or may not be the driver, will offer his service while retain-
ing the control and possession of the vehicle with himself. The customer is mere-
ly enabled to make use of the vehicle by travelling in the vehicle. In the case of a
passenger, he is expected to pay the metered charges, which is usually collected
on the basis of the number of kilometers travelled. These are all matters, which
are regulated by the Goverhment. Unlike the said scenario, in the case of a rent-a-
cab scheme, as is clear from the very fundamental principle underlying the
scheme, it is to give the hirer the freedom to use the vehicle as he pleases, which,
undoubtedly, implies that he must have possession and control over the vehicle.
This is the fundamental distinction between rent-a-cab and a pure case of hiring.
11.4 Shri Kishore Kunal Advocate for appellant further submitted that
vide CGST (Amendment) Act, 2018, Section 17 has been amended with effect
from 30-8-2018 which specifically allows the ITC on motor vehicles for transpor-
tation of persons having approved seating capacity of more than 12 persons
when they are used for making taxable supplies of transportation of passengers.
11.5 He also contended that the intention of the Legislature appears to
be to deny credit only in respect of motor vehicles when used for personal pur-
poses which is also clear from the memorandum explaining the recent amend-
ments to Section 17(5). In the present case, the Appellant requires the buses and
cars for plying the employees to the factories from where output supplies are
being made. Thus, denying the credit would be contrary to the intention of the
Legislature.
Discussion and Findings :
12. We have considered the material on record including the appellants
grounds, submissions, statutory provisions etc. In terms of Section 101(1) of the
Act, this Appellate Authority is mandated to pass such order as it thinks fit, con-
firming or modifying the ruling appealed against.
13. We now proceed to record our discussions and findings.
13.1 The appellant has contended that hiring of vehicle is different
from renting and hence the restriction on Rent-a-Cab service specified in Section
17(5) (b)(iii) to input tax credit on GST charged is not applicable and they are eli-
gible for input tax credit. Further the appellant contended that Appellant has
fulfilled all eligibility conditions for taking input tax credit specified in Section 16
of the Act.
13.2 The main question for determination in this appeal is (i) what is
rent-a-cab. (ii) whether renting of vehicle is different from hiring; and (iii)
whether input tax credit on GST charged by the contractors for hiring of buses
and cars for transportation of employees is admissible when there is a restriction
on admissibility of input tax credit on Rent-a-Cab service as provided in Section
17(5)(b)(iii) of CGST Act, 2017 and HSGST Act, 2017.
14. First of all we take up the issue what is Cab. We have observed that
the Authority for Advance Ruling, Haryana in its ruling has discussed this issue
in detail. We find that where any commercial vehicle is hired for transportation
of passengers, it would be squarely covered by the phrase “rent-a-cab”. In other
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